Our Insights from the 2025 Budget

On the impact on businesses, Ritchie Whyte, Partner and Head of Corporate and Business Advisory, said:

“Disposals of businesses by owners to Employee Ownership Trusts (EOTs) was gaining increased traction over the past few years. Following today’s Budget, changes to tax relief for disposals of shares to EOTs fundamentally alters the financial calculus for owners considering this succession route.
 
"Reducing capital gains tax relief on EOT disposals from 100% to 50% - for transactions completed on or after 26 November 2025 - significantly impacts the net proceeds available to selling shareholders. What was previously a tax-free, straightforward exit is now subject to a materially higher tax burden. For many owners, this shift inevitably makes an EOT less attractive when compared to alternative succession or sale strategies.
 
“As well as the impact on exit opportunities for business owners, businesses and employees will also be penalised by measures in the Budget, including the mileage charge for electric vehicles (from April 2028) and introduction of National Insurance contributions on pension payments above £2,000 (from April 2029).
 
“These changes add cost and complexity at a time when businesses need stability and support, and it is understandable that business owners and employees will want to pause to reassess their plans considering these developments.”

On changes to salary sacrifice in terms of the employer/employee relationship, Robert Holland, Partner and Head of Employment, said:

“This change to pension salary sacrifice schemes represents a significant shift in how these arrangements are treated and will materially affect how employers structure pension benefits over the next few years.
 
“For many organisations, salary sacrifice has been a tax-efficient way to enhance employees’ retirement savings while reducing National Insurance costs. The proposed changes remove much of that efficiency, particularly for higher earners and senior staff.
 
“From a legal perspective, employers need to proceed carefully. Salary sacrifice arrangements are contractual in nature, meaning any changes to pension contributions or remuneration structures will likely require consultation and, in some cases, employee consent. We expect to see a rise in employers reviewing employment contracts, benefit policies and remuneration frameworks as they seek to manage increased costs.
 
“There is also a potential employee relations risk. Altering established pension arrangements can impact morale, retention and trust, especially if changes are perceived as a reduction in overall reward. Employers will need to balance commercial realities with transparent communication and fair process.
 
“The key message is preparation. While implementation is scheduled for 2029, employers should start planning now by reviewing pension schemes and considering whether alternative reward structures might offer better long-term value.”

Meanwhile, on prospects for the oil and gas sector, Rod Hutchison, Partner and Energy Sector Lead, said:

“Against a background of declining revenues, lower oil and gas prices, and reduced production, and with extensive evidence presented by industry and business groups showing that continuation of the Energy Profits Levy could have catastrophic consequences for the sector - including the loss of up to 1,000 jobs per week - it is mind-boggling that there has been no softening of the Government’s position. It increasingly feels as though the sector’s concerns are not being heard.

"The North Sea Future Plan is therefore critical, as it begins to address the needs of operators working in existing oil and gas fields while safeguarding the sector’s vital jobs. We welcome the announcement of the North Sea Jobs Service, which will help sustain a strong pipeline of skilled workers across the energy industry and support the transfer of their expertise into renewable sectors. The industry will be watching closely for evidence that the Plan offers a balanced and supportive framework for the future of the North Sea."

On the mortgage market, Mortgage Director Greig Brown commented:

“If interest rate cuts follow tighter fiscal policy, we expect a positive shift in the UK mortgage market. Lower borrowing costs will make homeownership more accessible, particularly for first-time buyers who have faced affordability challenges in recent years. Home movers will also benefit from improved affordability, creating opportunities for upsizing or relocating that may have been out of reach previously. Existing mortgage holders stand to gain significantly, as refinancing becomes more attractive and monthly payments ease. While economic uncertainty remains, the combination of falling rates and stabilising inflation should help restore confidence and encourage more buyers back into the market. Overall, these changes could mark the beginning of a gradual recovery in housing activity, with demand strengthening as affordability improves.”